Are you capturing all your allowable tax deductions to make the most of your income tax return?
Individuals and employees can claim for general work-related expenses and occupation-specific expenses and working from home expenses.
The Australian Taxation Office (ATO) receives information from various sources, such as your employers about salary and wages that you have been paid for the financial year, Centrelink for any taxable income you have been receiving and financial institutions for interests you have earned for the year.
If you are an Australian resident for tax purposes, you need to declare all income you earned both in Australia and internationally.
Some of the income that you need to declare include:
- Wages and salaries from employment.
- Investment income, for example interest earned and dividends paid.
- Business income.
- Foreign income.
- Crowdfunding income.
- Sharing economy income, such as Uber or Airbnb.
- Any other income such as prize money, compensation or insurance payments.
Even if you have only earned a small amount from one of these sources, it still needs to be declared on the tax return. Gather all your records for anything you have earned apart from salary and wage payments from employers.
You will need:
- Bank statements showing interest income.
- Proof of earnings from other sources, such as crowdfunding or share economy platform.
- Records of business income.
- Records of any other income, such as payments received from overseas sources, prize winnings, insurance or investments.
Allowable Tax Deductions
If you are an employee, you are entitled to claim work-related expenses as a tax deduction. To claim a tax deduction, you must have spent the money out of your own funds and have not been reimbursed by your employer. The expenses must relate to your earnings as an employee. Make sure you have invoices and receipts as proof of payment for any work-related expenses.
Expenses you may be able to claim
- Car and travel expenses – make sure you have a travel diary to record details of trips taken for your employment.
- Clothing, laundry and dry-cleaning expenses – you may claim for occupation-specific clothing, uniforms and protective gear.
- Home office expenses – there are special rules this year for employees working from home because of COVID-19. You will need records of the hours you have worked from home to claim the ATO special rate. Download our Work from Home Calculator to record your working hours and work out your home office deductions.
- Self-education expenses – some deduction expenses that relate to your current employment are deductible.
- Tools and equipment – If you buy gear to help you in your job, these may be claimable. Some examples are small tools of trade, protective items, professional references and laptops.
Occupation and Industry Specific Guidelines
The ATO recognises that some occupations and industries have specific requirements that employees need to pay for.
There are handy ATO fact sheets for many industries, including hairdressers, doctors and other medical professionals, engineers, IT professionals, performing artists, fitness and sporting industry employees and more.
These guides are a great starting point if you are not sure what you can claim, but we can give you information tailored to your situation when you do your tax return.
Tax Deductions for Superannuation Contributions
If you have made personal superannuation contributions separate to your employer’s superannuation guarantee contributions, you may be able to claim this as a tax deduction. You will need to provide Notice of Intent to Claim form to your super fund and receive an acknowledgement from the fund before doing your tax return.
Book a time with us now to talk about your tax return and we will make sure you maximise your allowable tax deductions this year.